Private sector landlords will be able to choose to receive Local Housing Allowance direct, if they reduce their rents.
LHA is the allowance paid to housing benefit tenants in private rented accommodation. Unlike previous benefits, it is paid direct to tenants, leading to a number of landlords saying that the tenants fail to pass the payment on.
It is one of several measures laid before Parliament in new Housing Benefit Regulations.
Welfare reform minister Lord Freud said: “We are looking for private landlords to respond to the need for lower rents and in return we are prepared to permit direct payments from the state.
“This incentive will bring an overall downward pressure on rents in the private sector. As these rents come down, more properties will become available to claimants and landlords will have certainty that their income will be protected.”
The regulations also delay, to January 2012, capping LHA which is paid to existing recipients.
However, new recipients of LHA will have their allowances cut from next April. From then onwards, the maximum paid to any LHA tenants anywhere in the country will be £400 a week for a four-bed property.
The regulations also bring forward changes to the way LHA is calculated. At the moment, it is 50% of local average rents. From next April it will be 30%.
The National Landlords Association welcomed some of the concessions but added a note of caution: “Bringing forward the 30th percentile cut to April 2011 for new claimants will test how easily accessible rented housing will be for this group in need.
“The Government still needs to show how it will ensure that these tenants will be able to access at least the cheapest third of private rented properties and not be crowded out by other renters.”
See also next story.
Landlords asked to chop rents for tenants on benefits
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Comments
Oh and before anyone says "People can't buy with only one salary", then they shouldn't be buying in the first place! People do not have some god given right to buy their own house. They have no rights whatsoever and they should stay with their parents until they have the financial means to rent somewhere and anything else is a bonus!
We may well go towards a housing model similar to that of continental Europe where most people rent and what's wrong with that anyway?
It winds me up when I hear bitter would-be buyers moaning about buy-to-let landlords. We live in a free society where people invest what money they have saved in whatever way they choose. Sometimes it pays off, sometimes it doesn't, that's just life! BTW, these private landlords are providing accommodation to people who either want to rent or can't afford to buy. A housing shortfall created by the lack of council accommodation. Tax is also paid for every month's rent collected and for these people that blame the property bubble on landlords, try blaming the banks for letting first time buyers have 115% mortgages based on self certification of earnings! The majority of repossessions are NOT landlords, but home owners that borrowed more than they should have and no contingency plan should someone in the house lose a job! I.e. Base the mortgage on one salary not two!
Paul, I couldn't agree with you more. We have 6 on LHA and in all cases it is paid direct, as it can be under certain circumstances.
We have just inherited one family where it isn't paid direct and they owe over £2K in arrears. The financial statement they have had drawn up by a debt counsellor shows their total monthly income for a family of 4 is pennies short of £1800 per month! The landlord had tried to get LHA direct but been fobbed off by a lazy council.
Hopefully it's sorted now but it will take more than a few years to clear the arrears.
We won't reduce rents for direct payment, we just won't take them without it.
Paul: rents for my nice properties in nice areas are rising. Rents are not rising for people like you who provide housing benefits, they are falling. If you own property that is only attractive for housing benefit claimaints, nobody else is going to pay for them but the state, and your income is going to fall. As a taxpayer I think: quite right too. It's not our job to put money into your pocket.
If the rent is paid direct then the tenant found to be claiming wrongly the Landlord has to repay????
Fortescue-Smyth (!)
Yes mate, we are indeed taxpayers and that is the point.
Seems very sensible. We are all taxpayers and LHA got grossly out of hand under Labour. Landlords benefit from much-reduced default risk, and the whole think keeps rents affordable. The only people who lose in this are landlords who are too highly leveraged, if they get into trouble they only have themselves to blame. Might be some nice fresh stock coming on the market any day too!
Dam right they are abusing the system. I would say possibly 5% are really in need and it's right that they are helped. However the other 95% claim to be in need are not.
Sorting this issue out will go along way to shortening the debt as well as stopping the "get what I can for nothing" brigade!
O.K. if these people are really 'in need'.
However it would seem that according to reports many are just using (abusing) the system.
Sort that out first!
So councils are proposing that rents be reduced and the benefit to landlords are that they will now get paid directy.....well they should have been getting paid directly in the first place!The previous governments insistance on paying the money to the tenatns was nothing short of farcical and only encouraged tenants to not pay!Why would any landlord want to reduce the rent when rents are rising?!